Coinbase Launches ‘cbBTC’ – A New Bitcoin-Backed ERC20 Token

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Tanzeel Akhtar

Journalist

Tanzeel Akhtar

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Tanzeel Akhtar has been covering the cryptocurrency and blockchain sector since 2015. She has written for the Wall Street Journal, Bloomberg, CoinDesk, Bitcoin Magazine and Bitcoin.com.

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September 12, 2024 21:04 EDT

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Cryptocurrency exchange Coinbase is launching its token today, “Coinbase Wrapped Bitcoin” (cbBTC) – a new ERC-20 token backed 1:1 by Bitcoin.

In an announcement, the exchange said the new token launch is aiming at improving the utility of Bitcoin within decentralized finance (DeFi). It will allow users to use their Bitcoin across decentralized applications (dApps) on Ethereum and Coinbase’s Layer-2 blockchain known as Base.

What Is cbBTC?

According to Coinbase, cbBTC is an ERC-20 token, meaning it follows the Ethereum blockchain’s widely adopted token standard.

Each cbBTC token will be fully backed 1:1 by Bitcoin held by Coinbase. This will mean that the token maintains its value and is fully redeemable for Bitcoin. Users will be able to convert their BTC to cbBTC and vice versa, without worrying about discrepancies in value, said the exchange in an announcement.

The exchange said cbBTC will be supported on both the Base and Ethereum blockchains. Eventually, Coinbase said it has intentions to expand cbBTC’s reach to additional blockchains shortly, increasing the utility of the token.

Bitcoin Plays Important Role in Onboarding Users

In the statement, Coinbase emphasized the importance of Bitcoin in onboarding new users into the cryptocurrency space.

“As the oldest and most widely held crypto asset, Bitcoin plays an important role in onboarding users to crypto. Coinbase has been increasing utility for Bitcoin, first through the integration of the Lightning Network to drive instant, low-cost payments, and now with cbBTC. Starting today, millions of Coinbase customers can seamlessly and securely access financial apps within the Ethereum ecosystem using Bitcoin they already hold.”

Coinbase.

“The space of wrapped Bitcoin is long overdue for some new alternatives,” said Arik Galansky, VP of technology at Fireblocks.

He highlights that while “WBTC” another alternative has played an important role in DeFi adoption over the years, it has not kept up with the evolution of the tech and governance in the space.

“Recent changes have made everyone aware of the counterparty risks that WBTC holds and due to this, the industry should definitely have better alternatives in the market to choose from,” adds Galansky.

For users interested in tracking or using cbBTC, Coinbase has shared the smart contract addresses for cbBTC on Base and Ethereum:

1. **Base**: 0xcbb7c0000ab88b473b1f5afd9ef808440eed33bf

2. **Ethereum**: 0xcbb7c0000ab88b473b1f5afd9ef808440eed33bf

Recently Coinbase announced the successful completion of the first cryptocurrency transaction managed entirely by artificial intelligence (AI).